Certain Defense Department employees apparently didn’t get the memo instructing them not to use their government travel cards at casinos and adult entertainment establishments, the Pentagon inspector general reported on Tuesday.

In a congressionally requested follow-up to an investigation that caused a dust-up last May, the watchdog’s review of 30 cases of potential purchase card abuse found that managers “did not take appropriate action when notified.”

Even though many of the abusers repay the government for personal visits to entertainment emporiums during official travel, “DoD management did not consistently consider the security implications of improper personal use of the travel card,” the report said.

“DoD experienced potential national security vulnerabilities due to the untimely reporting or non‑reporting of derogatory information regarding misuse of government travel cards” to the Defense facility that adjudicates such data, it said. As a result, there were delays in resolving such issues as security clearance eligibility and assistance for employees with personal conduct issues, financial troubles or gambling additions.

The Pentagon issued guidance in March to step up enforcement of the 2012 Government Charge Card Abuse Prevention Act—right in the middle of this audit—despite arguments by some in industry that casino complexes host legitimate business entertainment services.

Specifically, the audit found that managers did not perform adequate reviews of cardholders past problems, did not take action to eliminate additional abuse, and failed to consistently consider the national security implications of the abuse. In all, 22 of 29 cardholders (of the 30 total cases reviewed, one cardholder did not have travel vouchers during the period of review) “sought and received reimbursements on 131 vouchers totaling $8,544 that directly reimbursed or indirectly may have reimbursed the cardholder’s personal use of the travel card.”

For example, one Army lieutenant colonel, when confronted with 10 high-risk casino transactions totaling $2,242, acknowledged the problem, saying, “I’m going to go ahead and let my commander know this investigation is occurring, provide him with the list of transactions in questions with my explanation of them. [That] way when the report comes out it’s already old news to him.”

But on Nov. 17, 2015, IG auditors “met with the cardholder’s brigade commander, chief of staff, resource management officer, security manager, and command inspector general. They were not aware of the cardholder’s personal use,” the report said.

As a result, the command deactivated the cardholder’s travel card and did not allow him to travel, the report said, “On the same day, the cardholder’s access to classified information was suspended and the incident was referred to security clearance adjudicators.” (Disciplinary actions are still pending.)

The IG referred the most high-risk casino transactions to the Defense Contract Management Agency, the Defense Logistics Agency and the Defense Threat Reduction Agency. It said the travel card program remains vulnerable to misuse, and that overpayments chip away at the larger travel budget.

Auditors recommended that travel card abuse be reported in a more timely manner to the appropriate service-related authority by the undersecretary of Defense for intelligence. They also proposed that the director of the Defense Travel Management Office revise regulations to improve identification of personal use of travel cards and resulting disciplinary actions.

Pentagon managers agreed, with one offsetting comment. A.M. Kurta, deputy assistant secretary for military personnel policy, wrote, “I believe it is important to note that the monetary amount of the personal use of the Government Travel Charge Card identified in the audit amounted to less than 0.04 percent of the total travel card spend and less than 0.03 percent of the total transaction volume in the period covered by the audit.”

More importantly, the deputy said, the $8,500 that was improperly reimbursed amounts to 0.001 percent of DoD’s $8 billion average annual travel budget.

Sen. Chuck Grassley, R-Iowa, said he was disappointed that the Defense Department failed to sufficiently follow up on the findings of the first IG audit. “The Defense Department needs to get serious about implementing the proper controls, and inspector general audits should continue,” he told Government Executive.

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